Glitnir Iceland Coming To Australia

A World of Opportunity for Australia's Geothermal Energy Industry

Sydney/Reykjavik 15th August 2008 As we watch the Olympics and get daily updates on Beijing's struggle with smog, take a minute to think about how different things could soon be. To understand the possible impact of geothermal energy for economic development, reduced carbon emissions and improved health of citizens, we can learn a lot from Iceland.

In 1930, Reykjavik, Iceland, dependent upon coal and oil for power and heating, was shrouded in heavy particulate smog, just like Beijing. Today, Iceland is a leading expert in sustainable energy with 99.9 percent of electricity generated from renewable energy and over 90 percent of the country's housing now heated with geothermal energy. One of Iceland's most important exports is that expertise, from which China is now benefitting.

Iceland is a small island nation of around 300,000 people located in the middle of the North Atlantic Ocean. Declared almost uninhabitable by the Danish centuries ago, the country entered the Second World War in poverty, the poorest nation in Europe at the time.

In 1943, the first district heating company was started with the use of geothermal power. An 18 km pipeline ran through the city of Reykjavk and by 1945 it was connected to over 2,850 homes. The oil crisis of the 1970s motivated visionary politicians to invest heavily in the development of geothermal and hydro energy to replace the dependence upon fossil fuels, specifically for the energy intensive issue of heating.

It has since been the policy of all governments of Iceland to promote the utilization of its natural resources for sustainable power development and it has allowed the country to diversify its industrial activities and economy.

The now price-competitive supply of geothermal heating and electricity has attracted direct foreign investment into the country, primarily in energy intensive sectors such as aluminium production, data storage and servers.

Not only has the move to green energy cleaned up the atmosphere, it is at the heart of a remarkable economic turnaround. Today, Iceland is one of the wealthiest nations in the world, with the 4th highest GDP per capita It is also one of the least indebted governments in the world (net debt 7.6% of GDP in 2007); Has a fully funded pension system with assets 130% of GDP (Finland: 71.3%, Denmark: 32%, Sweden 9.5%);

* It's largest export industries are seafood and energy (geothermal and hydro);
* Foreign assets amount to more than four-fold GDP,
* And to a large degree is unaffected by the current turmoil in the financial markets.

Naturally the geographic situation of Iceland, with a climate that demands heating for months each year and the vast geothermal reservoirs for direct use are unique, but many countries have similar needs and potential.

The U.S. Geothermal Energy Association states that 39 nations have the possibility to cover 100% of their electricity needs from geothermal, another 18 could cover 10% or more of their power needs through geothermal (this excludes direct usage for heating).

China is one of those countries. Nordic Bank, Glitnir, is already working as partner in what will be the largest geothermal based central heating project in the world in Xianyang in China. Sinopec, the Chinese energy company and Glitnir, signed an agreement last year to further develop geothermal energy projects in China with support from Geysir Green Energy and Reykjavik Energy Invest; world leading geothermal investment companies. The aim of the agreement is to increase the use of geothermal as a renewable energy source in China. This comes in addition to the Xianyang geothermal project that has been under development by the two companies and its partners since 2005.

"The utilisation of geothermal energy presents an environmental friendly, efficient and viable alternative to the traditional form of energy generation in China, namely coal, which accounts for more than 70 percent of total generation in China," says Alexander Richter, a Director in the Geothermal Energy Team at Glitnir Bank, Iceland.

Australia is next week hosting an international conference on geothermal energy, drawing the world's leading experts, including Glitnir's Alexander Richter. "Further advancements to drilling technology will assist with the spread of geothermal energy exploration and utilisation worldwide; however, direct research in EGS is currently being led by very small Australian companies.

The industry is fragmented, drilling costs are high, and Australian governments and financial markets remain sceptical of the viability of geothermal energy," says Mr Richter. "We have a role to play in the education of the market and in supporting the commercialisation of geothermal energy in Australia."

SOURCE: Glitnir Bank

For more information or to arrange an interview with Alexander Richter while in Australia from August 18 to 22,
contact:
Alex Harris
Masterstroke Group
Tel: (02) 9231 7650
M: 0412 635 274
E-mail: [email protected]